Oman urges GCC to reduce domestic energy consumption

DUBAI – Oman and neighboring Gulf states must move towards curtailing energy consumption drastically, reduce subsidies and boost efficiencies to keep the region’s rapidly rising oil and gas demand in check, the sultanate’s top energy official said Monday.

“We must drastically reduce our consumption, not only in Oman but in the region as a whole,” Oman’s Minister of Oil and Gas Dr. Mohammed Hamad Al-Rumhy said in a national keynote address at the first Gulf Intelligence Oman Energy Forum in Muscat today. The forum’s theme is focused on game changers impacting the Omani and global energy industry.

Today, the six Gulf Cooperation Council (GCC) states consume more primary energy than the whole of Africa even though their population is only one-twentieth the size of the continent’s, according to Chatham House’s Saving Oil and Gas in the Gulf report published in August. Heavily-subsidized energy has fuelled consumption growth in the region in recent years and led to rising energy subsidy bills for governments. According to International Monetary Fund estimates, energy subsidy costs in GCC countries ranged from 9-28% of government revenues in 2011.

“Subsidy is killing us. We should preserve energy on a daily level and use it wisely, which we’re not doing. We can do so much ourselves. We don’t need to start any nuclear, coal, bio-fuel activities in Oman,” the minister said. He added that there wasn’t much need for the sultanate to pursue renewable energy projects at present as “there is enough gas in the world.”

Abdulla Bin Hamad Al-Attiyah, President of Qatar’s Administrative Control & Transparency Authority and the country’s former oil minister, said in an on-stage interview at today’s forum that GCC states need to make a collective effort to curtail energy subsidies or be faced with drastic consequences.

“This is not a single country issue but a GCC problem. The region needs to move quickly to find a solution,” he said.

The emergence of Gulf states as major energy consumers has fuelled concerns over their ability to maintain oil export capacity. Domestic oil consumption among Organization of Petroleum Exporting Countries (OPEC) members has increased seven‐fold in 40 years, to 8.5 million bpd. They consume almost as much oil as China, which is equivalent to one-fourth of their production.

According to OPEC Secretary General Abdalla Salem El-Badri, who gave the international keynote address at the forum, the organization should be able to produce an additional 6 million barrels per day (bpd) of crude by 2018.

The increase would make up for declining output elsewhere, in particular in the U.S. where tight oil output is expected to start declining that year, El Badri said. OPEC output stood at 30.05 million bpd in September, down 400,000 bpd versus August levels.

Oman is the largest oil producer in the Middle East that is not a member of OPEC. The sultanate has set ambitious targets to boost the share of oil it produces from Enhanced Oil Recovery projects by 2021 in a bid to sustain a five-year trend of rising crude production levels. The country is also moving forward with an ambitious program to diversify the local economy as it seeks to reduce its dependence on income from hydrocarbons, add value to its oil and gas resources, and create jobs for its young and growing population, while at the same time strengthening ties with East Africa and South Asia.

“Oman is in an advantageous position and we must continue to make the most of our geographical location. We, as a nation, are at the gateway of the rapidly expanding regional as well as Asian and African markets,” said Mulham Al-Jarf, Deputy CEO of Oman Oil Company, which is the Title Partner at the Gulf Intelligence Oman Energy Forum.

Today’s forum is also being addressed by Nasser K. Al Jashmi, Under Secretary at Oman’s Ministry of Oil & Gas on the sultanate’s Oil & Gas In-Country-Value Program, and Dr. Aldo Flores-Quiroga, Secretary General, International Energy Forum (IEF) on Building New Partnerships for Post-Easy Oil Era.